Case Note & Summary
The appeal arose from a dispute between parties over a contract agreement containing arbitration clauses 63 and 64. The appellant's tender was accepted on 30 November 2006, and after claims arose, a legal notice for arbitrator appointment was served on 3 August 2009. As the respondents failed to appoint an arbitrator, the appellant filed Arbitration Petition No. 61 of 2009 under Section 11(6) of the Arbitration and Conciliation Act, 1996, in the High Court of Orissa on 23 October 2009. However, the appellant did not serve notice on the respondents or pursue the petition actively. Meanwhile, the respondents, unaware of the petition, suggested a panel for arbitrator selection on 28 January 2010, and the appellant selected two officers on 28 August 2010, leading to the constitution of an Arbitral Tribunal on 24 September 2010. The appellant participated initially by submitting a statement of claim but later raised objections about the tribunal's validity on 27 December 2011. Due to non-participation, an ex parte award was passed on 21 June 2013 rejecting the appellant's claims. Notices for the arbitration petition were issued by the High Court only in 2016, and the High Court dismissed the petition on 26 July 2019, citing delay and peculiar circumstances, with liberty to file objections under Sections 34 or 37. The core legal issue was whether the High Court erred in refusing to appoint an arbitrator under Section 11(6). The appellant argued that once the petition was filed, the respondents forfeited their right to appoint an arbitrator, as per settled law. The respondents contended that the appellant's delay and conduct warranted dismissal. The court analyzed that while the legal principle of forfeiture upon filing a Section 11(6) application is well-established, the appellant's inaction—failing to serve notice, sleeping over the petition for years, and participating in the arbitral proceedings—justified the High Court's decision. The court emphasized that the peculiar facts, including the appellant's selection of arbitrators and subsequent non-participation leading to an ex parte award, supported the dismissal. Consequently, the appeal was dismissed, upholding the High Court's order.
Headnote
A) Arbitration Law - Appointment of Arbitrator - Forfeiture of Right to Appoint - Arbitration and Conciliation Act, 1996, Section 11(6) - Once an application under Section 11(6) is filed before the High Court, the respondents forfeit their right to appoint an Arbitrator, and the High Court alone holds jurisdiction to appoint an Arbitrator. This principle is settled by precedents Datar Switchgears Ltd. v. Tata Finance Ltd. & Anr. and Punj Lloyd Ltd. v. Petronet MHB Ltd. (Paras 12-13). B) Arbitration Law - Delay and Laches - Dismissal of Petition - Arbitration and Conciliation Act, 1996, Section 11(6) - The appellant filed an arbitration petition under Section 11(6) on 23 October 2009 but failed to serve notice on respondents or pursue it diligently, sleeping over the matter for years. The High Court dismissed the petition due to this delay and peculiar circumstances, with liberty to file objections under Sections 34 or 37 against the ex parte award. Held that no error was committed by the High Court in dismissing the petition (Paras 13-16).
Issue of Consideration
Whether the High Court erred in declining to appoint an Arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996, considering the appellant's delay and conduct in pursuing the arbitration petition.
Final Decision
The appeal was dismissed, upholding the High Court's order dated 26 July 2019, which declined to appoint an Arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996, with liberty to the appellant to submit objections under Section 34 or 37 against the ex parte award.
Law Points
- Arbitration and Conciliation Act
- 1996
- Section 11(6) - Appointment of Arbitrator
- Forfeiture of Right to Appoint
- Delay and Laches
- Ex Parte Award
- Jurisdiction of High Court
